This week, just a few days before the Fourth of July holiday, the FTC announced a settlement with three fashion companies (that operated together as a common enterprise) over patriotic claims that the companies made about various accessories, such as belts, bags, wallets, and shoes.
Here are a few highlights from FTC’s complaint:
- The companies made unqualified “Made in USA” claims about many of their products. Despite the broad claims, the FTC alleged that many of the products were wholly imported or contained significant imported content.
- The companies made qualified claims that some belts were “Made in USA from Global Materials” because they took straps that were made in Taiwan and attached buckles in the US. The FTC alleged the claims were misleading because “attaching a buckle to a belt strap is a minimal assembly operation that does not change the name, character, or use of an imported belt strap.”
- By providing materials with those claims to trade partners, the companies provided the “means and instrumentalities” for those partners to commit deceptive acts or practices.
Here are a few highlights from the settlement:
- The companies are prohibited from making unqualified US-origin claims for any product, unless they can show that the product’s final assembly or processing – and all significant processing – takes place in the US and that all or virtually all components are made and sourced here.
- If companies make qualified claims, they must include a “clear and conspicuous” disclosure – as that term is defined in detail in the settlement – about the extent to which the product contains foreign parts, components, or processing.
- If the companies make claims about the assembly of a product, they must ensure that the product is last substantially transformed in the US, its principal assembly takes place here, and US assembly operations are substantial.
- The companies can’t provide materials to third parties that would enable them to make any prohibited claims.
In addition, the companies have to pay a monetary judgment of $191,481 and inform certain customers about the FTC action. This case demonstrates that the FTC continues to take “Made in USA” claims seriously. If you make claims about domestic origin, be sure to take a close look at the FTC’s Made in USA Labeling Rule and assess how well you’re complying. In the meantime, enjoy the Fourth of July holiday.